Bloomberg recently reported that the Permian basin (an oil field) of West Texas has drilled 114,000 oil wells in the previous decade. Many of them would turn a profit even with crude prices as low as $30 a barrel, which is putting OPEC nations under massive pressure. That’s why we are seeing another round of sell-off in crude oil.

US crude oil output has risen by almost 25% this year, to a record 11.7 million barrels per day (bpd).

The US-China trade war keeps the market uncertain as Trump is looking to hike the 10% tariff to 25% on $200 billion worth products. This has a very high probability of hurting the Chiese manufacturing sector. No manufacturing means less demand for crude oil. Since China is a top importer of crude oil, this sentiment threatens the crude oil bulls.

EIA Crude Oil Inventories

The stockpile report is due at 15:30 (GMT) today and economists are expecting a build of only 2.5 million barrels vs. 10.3 million barrels last week. The American Petroleum Institute (API) announced a surprise crude oil inventory draw this week, of 1.545 million barrels for the week ending November 16.

It’s the first week that witnessed a draw after six weeks of straight builds as reported by the API, which had weighed on oil prices. Let’s see how EIA report plays today.

About the author

Arslan Butt
// Index & Commodity Analyst
Arslan Butt is our Lead Commodities and Indices Analyst.
Arslan is a professional market analyst and day trader. He holds an MBA in Behavioral Finance and is working towards his Ph.D.
Before joining FX Leaders Arslan served as a senior analyst in a major brokerage firm. Arslan is also an experienced instructor and public speaker.

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